Tag: tax planning

Parliament House

Tax cuts Bill passes through Senate

Posted on | by Allan Hall

Revised tax cuts pass both houses

A broader range of taxpayers are set to receive tax cuts from 1 July, with Labor’s tax cuts bill passing through the Senate.

The bill to implement Labor’s revised tax cuts has now passed both houses of parliament.

Prime Minister Anthony Albanese announced in late January that Labor would make amendments to the stage three tax cuts to deliver broader and better outcomes to all taxpayers.

The revised measures involved cutting the lowest rate of income tax from 19 per cent to 16 per cent and the second lowest from 32.5 per cent to 30 per cent, increasing the Medicare levy threshold and the top 45 per cent tax threshold.

Treasury Laws Amendment (Cost of Living Tax Cuts) Bill 2024 passed through the Senate without amendment.

The Senate also passed the Treasury Laws Amendment (Cost of Living—Medicare Levy) Bill 2024, which increases the Medicare levy and Medicare levy surcharge low-income threshold amounts for individuals, families and individual taxpayers and families eligible for the seniors and pensioners tax offset.

Read more detail about this topic

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July

Super contribution caps increase from July

Posted on | by Allan Hall

Contribution caps to increase from 1 July 2024

Following the release of the latest Average Weekly Ordinary Time Earnings (AWOTE) index, the expected increase to the contribution caps from 1 July 2024 has been confirmed.

As a result, from 1 July 2024:

  • The standard Concessional contribution cap will increase from $27,500 to $30,0001.
  • The Non-concessional contribution cap, which is expressed as 4 times the standard concessional contribution cap, will increase from $110,000 to $120,0002.
  • The maximum Non-concessional cap available, under the Non-concessional contribution bring-forward provisions, will increase from $330,000 to $360,0003.
  • The Total Superannuation Balance Thresholds, used to determine the maximum amount of bring-forward Non-concessional contributions available to an individual, will also be adjusted.

The Non-concessional contribution caps and thresholds are summarised in the table below:

TSB at 30 June 2024Maximum available NCC CapMaximum available NCC Period
< $1.66 Million$360,0003 Years
$1.66 – < $1.78 Million$240,0002 Years
$1.78 – < $1.9 Million$120,0001 Year
$1.9 Million (and above)$0N/A
Non-concessional contribution caps and thresholds

In addition to the adjusted contribution caps and thresholds outlined above, several other thresholds will also be impacted including:

  • the eligibility thresholds for the Superannuation Government Co-Contribution
  • the CGT Contribution cap (which applies following the sale of eligible small business assets)
  • the Low-Rate Cap (which applies to the tax treatment of superannuation withdrawals)
  • Redundancy tax-free thresholds, and
  • The Superannuation Guarantee maximum contribution base.

The General Transfer Balance Cap, which is indexed according to movements in the Consumer Price Index (CPI), had already been confirmed as remaining set to $1.9 Million for the 2024-25 financial year.

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Is your side hustle now a business? 1

Is your side hustle now a business?

Posted on | by Allan Hall

Be aware of any tax obligations if your side hustle is considered a business earning business income

Work out whether you’re in business and when your business starts for tax purposes.

What is a business?

Generally, a business involves a set of continuous and repeated activities you do for the purpose of making a profit. Profit can be in money, but it can also be made through other means, like being paid with goods or services (such as a barter deal).

A one-off transaction can also be a business if it is either:

  • intended to be repeated
  • the first step in starting a business.

You can run one business or multiple businesses at the same time.

When you’re not in business

Not everything you do to make money is a business. Your activities are not a business when they are:

  • a one-off transaction (unless it is the first step in carrying on a business or intended to be repeated)
  • done as an employee
  • a hobby or recreation from which you don’t seek to profit
  • a simple investment, such as passively holding shares on which you receive dividends or a rental property you let through an agent.

Even if you’re not in business, you may still need to declare certain payments you receive as assessable income in your income tax return.

When a company is not in business

Most companies are in business if they intend to and are likely to make a profit, however some companies are not in business. For example, a company is not in business if it:

  • holds assets solely for its shareholders’ private use, and its running costs are funded solely by its shareholders
  • provides social and recreational activities for members without seeking to make a profit.

Steps to work out if you are in business

  1. Identify all relevant, related activities
  2. Are the activities a business?

When does your business start?

Knowing when will affect the registrations you must have and when you need to apply for them. It may also affect how tax laws apply to your activity, the assets you use, and the tax concessions or deductions available to you.

Have your activities changed?

If your activity changes in a significant way you must reassess whether or not you are in business.

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car buying private or business

Car limit for depreciation

Posted on | by Allan Hall

Assets and exclusions

The maximum value for calculating depreciation on the business use of a car first used or leased in the 2023–24 income year has increased to $68,108.

There is a limit on the cost to work out the depreciation of passenger vehicles (except motorcycles or similar vehicles) designed to carry a load of less than one tonne and fewer than nine passengers.

The maximum value for calculating a claim is the car limit, irrespective of any amount paid for a trade-in in the year in which the car was first used or leased.

Income yearCar limitATO reference
2023–24$68,108The indexation factor is 1.052, calculated as 435.5 divided by 413.8
2022–23$64,741The indexation factor is 1.066, calculated as 413.8 divided by 388.1
2021–22$60,733The indexation factor is 1.027, calculated as 388.1 divided by 377.9
2020–21$59,136The indexation factor is 1.027, calculated as 377.9 divided by 368.1
2019–20$57,581No indexation – the indexation factor is 0.987 calculated as 368.1 divided by 373.0
For examples of how to apply the car limit visit the ATO website

How the yearly car limit is calculated

The car limit is indexed annually in line with movements in the motor vehicle purchase sub-group of the consumer price index.

The indexation factor is calculated by dividing the sum of the index numbers for the quarters in the year ending 31 March by the same numbers for the quarters in the year ending on the previous 31 March.

The car limit amount is then indexed by multiplying it by the indexation factor unless the indexation factor is one or less.

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eofy 30 june

End of Temporary Full Expensing 30 June

Posted on | by Allan Hall

Just under a month to go before the Temporary Full Expensing Measures finish up

The temporary full expensing rules allow eligible businesses to claim a tax deduction for the full cost of eligible depreciable assets (except for motor vehicles which are subject to the current car cost limit of $64,741).

Key changes

  • The temporary full expensing measures that have allowed small and medium businesses to write off the full cost of new assets, with no limit, (other than the cost limit on motor vehicles) is scheduled to end on 1 July 2023
  • Any business considering purchasing assets and utilising these measures prior to this date should plan now — it is important to note that to receive the deduction, an asset must be installed and ready for use.

To claim the deduction in full, in the year the asset is acquired, the asset must be installed and ready for use and must be used for a taxable purpose.

Temporary full expensing supports businesses and encourages investment, as eligible businesses can claim an immediate deduction for the business portion of the cost of an asset in the year it is first used or installed ready for use for a taxable purpose.

From 1/7/2023 to 30/6/2024, businesses with turnover up to $10M will be entitled to claim an immediate tax deduction for assets costing $20,000 or less. Assets purchased above this amount will not get an immediate deduction.

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working from home

WFH changes and what the ATO is looking for

Posted on | by Allan Hall

Calculation and record-keeping requirements of your working from home (WFH) deductions may have changed for the 2022-23 income year.

The 80c per hour temporary shortcut method ended on 30 June 2022.

For the 2022-23 income year you may be able to use either the revised fixed rate method or the actual cost method to determine your working from home deductions.

Whilst the actual cost method remains unchanged, the fixed rate method has increased from 52c per hour to 67c per hour.  The revised fixed rate method incorporates the following usage expenses:

  • electricity
  • gas
  • stationery
  • computer consumables, such as printer ink
  • internet
  • phone.

It is not possible to claim an additional deduction for expenses that are already covered by the revised fixed rate method. However, you may be eligible to claim a separate deduction for the depreciation of assets, including items like laptops, mobile phones, and office furniture.

To claim your working from home deductions using the revised fixed rate method, you must be able to provide both:

  • A representative record of the total number of hours worked from home during the period from 1 July 2022 to 28 February 2023.
  • A record of the total number of actual hours worked from home for the period 1 March 2023 to 30 June 2023.

If you choose not to use the fixed rate method, you may be able to use the actual cost method. Please contact your Allan Hall Accountant to assist you in getting the best tax deduction for your personal circumstances.  

Regardless of the method you choose, it is important to maintain accurate and complete records for at least 5 years to support your claims for home-based business expenses.

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stopwatch countdown to deadline

End of temporary full expensing

Posted on | by Allan Hall

Temporary full expensing measures finish 1 July 2023

The temporary full expensing rules allow eligible businesses to claim a tax deduction for the full cost of eligible depreciable assets (except for motor vehicles which are subject to the current car cost limit of $64,741).

To claim the deduction in full, in the year the asset is acquired, the asset must be installed and ready for use and must be used for a taxable purpose.

Key changes

  • The temporary full expensing measures that have allowed small and medium businesses to write off the full cost of new assets, with no limit, (other than the cost limit on motor vehicles) is scheduled to end on 1 July 2023
  • Any business considering purchasing assets and utilising these measures prior to this date should plan now — it is important to note that to receive the deduction, an asset must be installed and ready for use.

Temporary full expensing supports businesses and encourages investment, as eligible businesses can claim an immediate deduction for the business portion of the cost of an asset in the year it is first used or installed ready for use for a taxable purpose.

From 1/7/2023 to 30/6/2024, businesses with turnover up to $10M will be entitled to claim an immediate tax deduction for assets costing $20,000 or less. Assets purchased above this amount will not get an immediate deduction.

CONTACT ALLAN HALL

house key

NSW land tax changes 2023 year

Posted on | by Allan Hall

NSW First Home Buyer Choice

The NSW Government now provides first home buyers purchasing properties for up to $1.5 million the ability to choose to pay an annual property tax instead of stamp duty.

Key points

Changes to the NSW property tax system give first home buyers a choice:

  • Stamp duty for first home buyers in NSW can be paid upfront, or
  • Pay property tax every year until the property is sold.

Summary of the main changes for the 2023 year include:

  • Land tax threshold increases to $969,000
Tax yearGeneral thresholdPremium threshold
2023$969,000$5,925,000
2022$822,000$5,026,000
  • Foreign Owner surcharge increases to 4%. From the 2023 land tax year, the surcharge land tax payable on residential land owned by foreign persons increases from 2% to 4% of the taxable value of the residential land owned at midnight on 31 December 2022
  • Early payment discount reduced. From the 2023 land tax year, the discount for early payment of land tax reduces from 1.3% to 0.5%.

The property tax will only be payable by first home buyers who choose it, and will not apply to subsequent purchasers of a property.

The savings required to meet the up-front costs of a home purchase are an important barrier for many would-be purchasers. Removing the obligation to pay stamp duty is intended to lower these up-front costs and cut up to two years off the time needed by many first home buyers to save for a home. This initiative is designed to lower the up-front costs of home purchases and help to boost the rate of home ownership in NSW.

Existing stamp duty concessions for first home buyers are available for purchases of up to $800,000, and these concessions will continue. The property tax option will be available for properties for up to $1.5 million, helping a broader group to become first home buyers.

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hand holding cryptocurrency keychains

Potential cryptocurrency tax implications on trades

Posted on | by Allan Hall

Heard of Bitcoin, Ethereum and dogecoin?

These are a few common cryptocurrencies available in the digital world.

“Crypto” is a virtual currency that nobody controls and there are no physical notes or coins, it’s a transfer of digital assets. That’s right “assets” which triggers crypto tax that you need to be mindful of when preparing your tax return.

In the last few years, the ATO has been targeting crypto and it’s important to understand the tax consequences of owning these cryptocurrencies.  If you sold, bought or earned interest from crypto during the last financial year, you’ll need to declare this in your next tax return. The ATO has information when you sign up to Australian crypto exchange or wallets and they are increasing their number of sources to track this data.  So, if you have dabbled in crypto, it’s best to speak to your accountant and let them know of your crypto transactions so you don’t get caught out.

Crypto gains can be a very complicated topic to understand as it will depend on your personal circumstances as well as the specific transactions you’re making. Generally, like any asset you own, if you sell or trade/exchange a crypto this is a tax event and the gain or loss on this will need to be reported in your tax return.

Disposing of one cryptocurrency to acquire another cryptocurrency is also treated by the ATO as a taxable event. As there is no physical money being received in this type of exchange, the market value of the cryptocurrency you receive needs to be accounted for in AUD dollars.  

The ATO has confirmed that when you’re moving crypto around between your own wallets, this is not a disposal and you don’t need to report it (i.e. not sold or exchanged to another form of crypto and not transferred into someone else’s name as beneficiary). This is because you retain ownership of them and they remain in the same currency.  However, you need to keep track of the original costs and fees on transfer of the transferred coins and keep sufficient proof of it.

There is software available to help track and store this data such as Koinly, Ledger Vault and CoinTracker to name a few. Each provides a summary of the buys, sells, gains, losses and portfolio summary for the financial year as well as a detailed tax report.   

The most important thing to remember is to keep a record of all your transaction events and to disclose your transactions to your accountant so we can assess and advise on the potential tax implications of how you trade.

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